NJ didn't really become a Democratic stronghold until later on, when minority population rapidly grew, plus suburbanites (especially wealthy ones) went more liberal as the GOP went conservative.
1988 was the year of "Read my lips: NO NEW TAXES." Never underestimate the power of a tax issue to unite and mobilize suburban Republican voters.
The big issue of New Jersey politics in the 1960s and 1970s was the imposition of an income tax. Democrats and Republicans both opposed it, but the movement for it became stronger because property taxes were becoming unbearably high in New Jersey. Finally, in the mid-1970s, Democratic Governor Brendan Byrne signed a state income tax into law; he was only re-elected in 1977 because of the sheer incompetence of Republican Gubenatorial nominee State Sen. Raymond Bateman. But the damage had been done.
The 1988 New Jersey suburbanites who voted for Bush remembered the promise of no state income tax, and remember it being broken. New Jersey is way past this now, but in 1988, they were still smarting from it, and New Jersey had a more white electorate than it does now. It also had a lot of white Reagan Democrats in its cities who voted Democratic in local elections, but voted GOP for President.
